Echo Boomers Set New Industry Standards
By IBISWorld Industry Analysts
Although the large Baby-Boomer demographic has significantly affected various industries over the years, especially as the group approaches and enters retirement age, the offspring who follow in their footsteps are also making waves. Branded as the “Echo Boomers,” this group is a subsegment of Generation Y born to the Baby Boomers. Although there are no official dates for this age group, Echo Boomers are a product of increased birth rates from the early1980s through 1990s. Most academic studies cite 1982 through 1995, forming a vibrant group of 65 million people in the United States.
Like their parents’ generation, the Echo Boomers are expected to exert considerable influence over many US industries as they mature. Although Echo Boomers hold the highest post-housing collapse unemployment rate of any US demographic, they are actually highly educated and hold substantial buying power. Currently aged between 16 and 30, the demographic is known for its aspirational shoppers, middle-income earners with high-end tastes and affinity toward popular brands, affecting a multitude of retail and fashion industries. Additionally, Echo Boomers have fully embraced the technologies they have grown up with, buying the latest gadgets and accessories and doing much of their banking, shopping, communicating and even dating online.
Where Echo Boomers save money is related to their aversion to homeownership. Although still comprising a decent number of teenagers, the group overall is less inclined to purchase homes. Instead, they’ve been flocking to urban districts, where apartment complexes and commercial centers are reveling in their business. These individuals prefer the more energetic, car independent lifestyles that big cities offer. Additionally, as Echo Boomers age, they have proven less interested in marriage and have not adopted the gender roles typical of their parents’generations. Males, in particular, have made the greatest shift, with growing interest in personal grooming, fashion and household chores. But, one thing is for sure, Echo Boomers’ penchants will significantly impact key markets and related businesses as their incomes increase and their households grow in the coming years.
Turned off by debt, turned on by city living
Coming into the largest demographic for first-time home purchase, Echo Boomers are exhibiting an aversion to homeownership. According to the US Census Bureau, the homeownership rate among Generation Y individuals (of which echo boomers are a subsegment) is low and declining, falling from 41.8% in 2006 to 36.8% in 2010. Many of these young people watched as their parents lost a considerable amount ofwealth in the housing crisis. Adding to this is a rising level of student loan debt, since a decent share of the group’s 16- to 29-year-olds are college students or graduates. In 2008, 40.0% of 18- to 24-year-olds were attending college, also according to the Census – a higher percentage than any previous generation in that age range. American student loan debt surpassed the level of national credit card debt back in 2010 at about $1 trillion, and the level continuesto rise. So instead of adding mortgage payments to that debt, Echo Boomers are delaying homeownership.
Instead, Echo Boomers old enough to live on their own are opting to rent, which is helping boost the apartment market nationwide. As this group’s members increasingly move out of mom and dad’s or out of the dorms, their share of demand for apartments will grow, pushing up overall demand for rental properties. Consequently, revenue for the Apartment and Condominium Construction industry is projected to grow an average 10.6% per year to $44.95 billion in the five years to 2017. To tap into that growth, though, these multifamily building developers will need to cater to Echo Boomers’ preferences and build communities that appeal to them. Among those preferences is the desire to live in denser metropolitan areas. Considerably more than the generations before them, Echo Boomers are flocking to urban city centers. Recent graduates and young professionals are actively seeking employment in hot job centers, and they are increasingly deciding to live closer to their jobs. Echo Boomers prefer the concentrated, car-independent lifestyles that 24-hour urban districts offer, with work, retail and entertainment needs all fulfilled in one place. Growing city centers like Austin,Washington DC and San Jose are attracting young professionals in droves and are, thus, ranked among the top markets for commercial and residential real estate investment and development. Recognizing this trend, retail, dining and entertainment companies are focusing on Echo Boomers and the city centers they’re populating. For example, traditional big-box retailers are introducing smaller stores to tap into this urban market. Target has launched its CityTarget store concept, which places the one-stop shop in the heart of metropolitan areas. The first CityTarget stores are expected to open in Chicago, Los Angeles, San Francisco and Seattle later this year. Similarly, Walmart has introduced Walmart Express stores,which are also smaller versions aimed at city-dwellers. In turn, the commercial building construction and real estate industries are expected to benefit from this heightened demand for more metropolitan living. In fact, Commercial Real Estate industry revenue is expected to hit $860.18 billion in 2017, up from an estimated $602.61 billion in 2012.
Aspirational shoppers: high style, low budget
Young shoppers are aspirational shoppers. Because consumers in the Echo Boomer demographic do not yet have established careers and incomes, their purchasing power is not as strong as that of older adults. As such, they are limited to making luxury purchases on a budget. IBISWorld defines the aspirational shopper as an individual who makes luxury item purchases priced below $300 in order to satisfy his or her need for shopping on a tight budget. Several retailers have already begun catering to the younger demographic by offering lower-priced items in their stores. For example, Tiffany & Co. – major player in the Jewelry Stores industry – has introduced special product sections on its website that highlight the lower price ranges (e.g. $250 and less). Similarly, leather bag company Coach is leading the way for the Handbag, Luggage and Apparel Accessory Stores industry. The operator introduced its Poppy line of “youthful” purses in 2009 to target the younger generation. The Fashion Designers industry has also taken note of Echo Boomers’ penchant for luxury brand discounts. The trend of making previously unattainable designer brands affordable to the aspirational shoppers has served the industry well. Design houses like that of Alexander McQueen have come out with diffusion lines, moderately priced clothing collections targeted at nontraditional luxury shoppers. Similarly, designer lines’ collaborations with mass merchandisers like Target and fast fashion stores like H&M have opened up luxury apparel to younger shoppers. Industries and operators that are making luxury more affordable are set to benefit from the expansion of the Echo Boomer generation.
Gender roles a thing of the past
Over the past decade, as many Echo Boomers have entered adulthood, gender roles have begun to change. The rise of the metrosexual and changes in household roles have been some of the biggest differences between Generation Y and other generations. The term metrosexual was derived from metropolitan and heterosexual and has been increasingly used to describe a male greatly interested not only in appearance and style, but also family, food and art. So with more men concerned with personal grooming, the Cosmetic and Beauty Manufacturing industry has expanded into the niche male market and has experienced higher revenue as a result of its male-targeted products. Companies such as L’Oreal are producing men’s antiwrinkle and firming moisturizer, hair gel and thickening shampoo. The Hair and Nail Salons industry is experiencing an increase in high-end barbershop establishments. The demand for these shops is growing as many men become particular about their appearance, especially their hair. American apparel companies have also benefited from the metro male trend. More American apparel companies, like Seven for All Mankind, are selling designer jeans and shirts to this generation since a greater share of men are concerned with the way they dress and with new clothing trends. These trends are only anticipated to expand as it becomes more socially acceptable for a man to be concerned with the way he looks and an expectation that men should be well groomed and presentable.
Along with grooming and clothes, more men are becoming involved in household chores. With more women in the workforce, many couples are more evenly distributing household chores. More men are participating in grocery shopping, so many consumer product manufacturers are slowly changing their tactics to attract men. For example, Procter & Gamble launched a website called Manofthehouse.com that offers advice on cleaning, cooking and health. Also, men are playing a greater role in the kitchen, creating an expanding customer base for cookbook publishers, such as Random House and HarperCollins. For instance, Chronicle Books published a book in 2011 called Eat Like a Man: The Only Cookbook a Man Will Ever Need by Ryan D’Agostino.
Self-improvers of mind and body
Along with being one of the most educated generations, Echo Boomers continue to invest in their well-being and expanding their knowledge. Partly due to the recession, enrollment for for-profit universities and junior colleges has been on the rise as this generation sought to improve their education to improve their chances in the job market. Junior colleges are offering more night classes to accommodate more students’ schedules as they balance school and jobs. Also, the Language Instruction industry is experiencing an increase in demand as many Americans broaden their skills to adjust to the increase in globalization in many companies. Companies that offer self-study programs, such as Rosetta Stone, are becoming increasingly popular, allowing Echo Boomers to study new languages on their own time.
In addition to education, Generation Y and its Echo Boomers are focusing on improving their health. Even during the recession, the Fitness Clubs industry’s revenue grew as young adults became more health conscious and wanted to improve their physical fitness. Echo Boomers are attracted to variety and customization, so fitness clubs are expanding their class offerings and providing more personal trainers for customized needs. Health Stores are also gaining from this trend as Echo Boomers look to vitamins and supplements to increase their physical health.
Satisfying the need to stay connected
Echo Boomers thrive in the virtual realm and drive demand for new technologies that help them stay connected. Young adults depend on technology for entertainment, to access information and communicate with friends. Many own a computer, television and smartphone and a growing number own netbooks or tablets. Most Echo Boomers also pay for extras like cable, mobile broadband and text messaging.
Generation Y overall spends a lot of time online, tapping into social networks and virtual video game realms. According to the 2010 “American Time Use Survey” by the Bureau of Labor Statistics (BLS), consumers in this age range spent more time than any other age group playing games and using the computer for leisure, as well as socializing and communicating. Aside from watching TV, these were also the leisure activities that this generation spends the most time doing. As such, this demographic is largely responsible for the growing popularity of social networks, including, Twitter, Facebook and Google Plus. Also, a 2011 study published by consumer research firm Nielsen shows that consumers in this age range watch the most online video. The top online video destinations are Youtube and Vevo, which both benefit from the increasing amount of time that young adults spend watching video online. Young adults, including those in the Echo Boomers segment, represent the consumers who spend the most time using new gadgets and technologies, driving demand for electronics products and wireless services. Consequently, companies like Best Buy and Verizon spend a large proportion of their marketing budgets on trying to reach young adults. As they age, Echo Boomers’disposable incomes and spending on technologies that keep them connected are escalating. Likewise, their increased spending power is feeding into advertising targeted at Echo Boomers, which further boosts revenue for online video channels and video games.
To download full research reports for the industries discussed in this article, click on the report titles below.
Apartment & Condominium Contstruction, Apartment Rental, Commercial Real Estate, Jewelry Stores, Handbag, Luggage & Accessory Stores, Fashion Designers, Men's Clothing Stores, Cosmetic & Beauty Products Manufacturing, Cookbook Publishing, Health Stores, Language Instruction, Gym, Health & Fitness Clubs, Consumer Electronics Stores, Wireless Telecommunications Carriers, Video Games
